Global jet fuel shortage could disrupt summer tourist season - Bloomberg
Kyiv • UNN
A shortage of jet fuel has emerged due to the war in Iran and the blockade of the Strait of Hormuz. Airlines are canceling flights en masse and raising ticket prices.
The war in Iran has caused a global aviation fuel shortage, threatening to disrupt vacation plans ahead of the peak summer tourist season in the Northern Hemisphere. This was reported by Bloomberg, according to UNN.
Details
The near-total halt of shipping through the Strait of Hormuz has disrupted oil exports from the Persian Gulf, forcing refineries in other regions to cut production of jet fuel and its base component, kerosene. Additionally, the problem is exacerbated by the fact that refineries in the Middle East, which typically produce more than 10% of the world's jet fuel and kerosene, have faced difficulties in shipping cargo outside the region.
Jet fuel prices have risen even more than crude oil since the start of the conflict. In Europe, they have broken records, exceeding $200 per barrel. Due to rising fuel costs and shortages, airlines are canceling thousands of flights, decommissioning older, less efficient aircraft, and raising ticket prices. Further flight cancellations are not ruled out.
Which markets are affected the most
Asia has been hit the hardest, as it typically receives most of its oil through the Strait of Hormuz. Jet fuel and kerosene production at Asian refineries fell to 2.9 million barrels per day in April, more than half a million less than in February, according to the OilX service by Energy Aspects.
Europe is also under pressure. Refineries in the region have been closing for years due to competition from larger and more efficient plants in Asia. About 40% of jet fuel in the EU is imported, and half of that volume usually passes through the Strait of Hormuz.
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Shell stated that European refineries are maximizing jet fuel production. The region is also increasing purchases from North America and Africa; however, it is unclear if these supplies will be sufficient, especially given the summer peak in demand.
According to International Energy Agency estimates, if Europe cannot compensate for more than half of the lost supplies from the Middle East, jet fuel stocks could reach critical levels in June, potentially leading to shortages at individual airports and flight cancellations.
U.S. position and global restrictions
U.S. President Donald Trump stated that the U.S. has "enough" jet fuel and rejected the idea of export restrictions. At the same time, American refineries are already operating at record volumes with limited capacity to increase production, and most fuel is supplied to the domestic market.
North America uses Jet A fuel, which has a higher freezing point than Jet A1, traditionally used in Europe. The European Commission stated that there are no regulatory obstacles to using imported Jet A in Europe.
Although the U.S. is less vulnerable to the global shortage as a net exporter, the West Coast still imports 15–20% of its jet fuel, primarily from South Korea.
Impact on airlines and ticket prices
Jet fuel is the second-largest expense for airlines after salaries and can account for up to 30% of operating costs.
European airlines are partially protected by fuel hedging, while most American carriers abandoned this practice after the 2008 crisis, making them more vulnerable to price spikes. American Airlines expects more than $4 billion in additional costs this year, and IAG expects about €2 billion in 2026.
Budget airlines have been particularly hard hit due to low margins. Some, including Spirit Aviation, were forced to cease operations after fuel costs rose.
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Airlines are passing costs on to passengers through fare surcharges and increased fees. In Hong Kong, Cathay Pacific raised fuel surcharges to approximately $350 for long-haul flights.
In the U.S., the average price of an international ticket rose by 16% to $1,101, and a domestic ticket by 24% to $365.
Flight reductions
Airlines have already cut summer capacity by nearly 4%, removing over 9 million seats. Lufthansa plans to cancel 20,000 unprofitable short-haul flights.
Despite a possible resumption of shipping through the Strait of Hormuz, it will take time for the market to return to normal, and ticket prices will remain high as airlines attempt to recoup costs.
Passenger compensation depends on legislation, but in the EU, payouts of up to €600 are possible in the event of flight cancellations due to fuel shortages.